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How politicians make decisions under risk: a political choice experiment

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Abstract

We report on an experimental study with real-world politicians. These political experts face political choice problems under risk and probability. Thus, we test the frequently observed violations of rational choice theory -the reference point effect, loss aversion, framing effects, and the common ratio effect- with experts from the field. Their choices violate expected utility theory. Nevertheless, they appear to be more rational and less risk averse (loving) in the domain of gains (losses) than student subjects.

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Paper provided by Centro de Estudios Andaluces in its series Economic Working Papers at Centro de Estudios Andaluces with number E2004/58.

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Length: 22 pages
Date of creation: 2004
Date of revision:
Handle: RePEc:cea:doctra:e2004_58

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Keywords: Subject-pool effect; experts; expected utility; prospect theory.;

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  11. Tversky, Amos & Kahneman, Daniel, 1992. " Advances in Prospect Theory: Cumulative Representation of Uncertainty," Journal of Risk and Uncertainty, Springer, vol. 5(4), pages 297-323, October.
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  14. Brandts, Jordi & Schram, Arthur, 2001. "Cooperation and noise in public goods experiments: applying the contribution function approach," Journal of Public Economics, Elsevier, vol. 79(2), pages 399-427, February.
  15. Plott, Charles R, 1982. "Industrial Organization Theory and Experimental Economics," Journal of Economic Literature, American Economic Association, vol. 20(4), pages 1485-1527, December.
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